March 19, 2004
House GOP: Senate Pension Bill Offers Unneeded Relief
House Republicans showed renewed resistance yesterday to provisions
aiding multi-employer pension plans included in the Senate-passed
pension bill now the subject of a House-Senate conference, despite a new
report showing long-term problems facing multi-employer plans,
CongressDaily reported. The General Accounting Office (GAO)
reported that multi-employer pension plans, which cover employees under
collective bargaining agreements spanning more than one company, are
increasingly underfunded because of 'stock market declines, low interest
rates and poor economic conditions.' The plans also tend to cover
declining workforces, which means fewer active workers are paying into
retirement plans to support growing numbers of retirees, the GAO said.
While the GAO said the problems are greater in single-employer pension
systems, it also found that the number of active workers covered by
multi-employer plans has dropped by 1.4 million since 1980.
During a hearing before the House Education and the Workforce's
Subcommittee on Employer-Employee Relations, Republicans downplayed the
problems and said a long-term solution is needed rather than the
Senate's approach. Education and the Workforce Chairman John Boehner
(R-Ohio) said recent improvements in the stock market should improve the
financial picture for the pension funds, the newswire reported.
The GAO will release a full report next week covering multi-employer
plans, said Barbara Bovbjerg, director of education, workforce, and
income security issues for GAO. Meanwhile, John McDevitt, senior
vice-president for UPS, told the panel that long-term changes are needed
to fix structural problems plaguing the multi-employer pension system.
'A reversal of Wall Street will not solve the underlying problems,' he
said, the newswire reported.
Former Polaroid Corporation Settles False Claims Act Suit, Reports
U.S. Attorney
The General Services Administration's Office of the Inspector General
announced in a press release that the United States has settled a civil
suit brought against the former Polaroid Corporation for violations of
the federal False Claims Act. The False Claims Act makes it unlawful to
knowingly submit a false or fraudulent claim for payment to the United
States. As part of the settlement, Polaroid agreed that the United
States' Proof of Claim filed in Polaroid's bankruptcy proceedings will
be allowed for $3.2 million. The amount of funds the United States will
actually recover will be determined by the United States Bankruptcy
Court when it distributes assets to all general unsecured creditors.
Former Enron CEO Skilling Pays Attorneys $23 Million
Attorneys in the case against Enron Corp.'s former CEO, Jeffrey
Skilling, reportedly received $23 million for his defense before the
government froze the assets of the highest-ranking former company
executive indicted so far in the scandal, according to court filings,
the Associated Press reported. Law professors and other experts were
surprised at the legal fees that were paid before a federal judge froze
about $55 million of Skilling's assets, including his homes.
Skilling faces 35 felony counts of conspiracy to commit fraud,
securities fraud, wire fraud, making false statements to auditors and
insider trading. But he also has potential legal liability in about 100
conglomerated civil cases and has been sued by the Securities and
Exchange Commission and investigated by Congress and the bankruptcy
examiner, the newswire reported.
Chicago Court to Hear Whether United Airlines Misled Retirees over
Benefits
A report to be submitted to the U.S. Bankruptcy Court in Chicago on
Friday could be a pivotal moment in United Airline's effort to emerge
from bankruptcy, the Knight-Ridder reported. The report by a
court-appointed examiner could determine whether United misled 35,000
U.S. retirees that their health benefits would be untouched if they left
their jobs by July 1, 2003. If that's the finding, Judge Eugene
Wedoff will decide what action to take. Or, the examiner could give
United a green light to hammer out a deal that -- with Wedoff's approval
-- could make the retirees pay more for their own benefits, the newswire
reported.
Ivaco Inc. Wins Court Order Ending Truckers' Boycott of Insolvent
Firm
Ivaco Inc. has won a court victory ending a boycott by trucking
companies while the firm operates under bankruptcy-court protection, the
Associated Press reported. Ivaco said on Thursday it won a court order
from Justice James Farley of the Ontario Superior Court in Toronto,
requiring three trucking companies to continue supplying services to the
firm. On Wednesday, those trucking companies and others announced a
boycott aimed at obtaining money owed to them before Ivaco obtained
court protection under the Companies Creditors' Arrangement Act.
Since the court order, trucking services to Ivaco have resumed, the firm
said in a release. The withdrawal of services began on Wednesday when
trucks failed to show up for their usual pickups and deliveries for
Ivaco. David Bradley, president of the Ontario Trucking Association,
said it was the first action of its kind in the trucking industry in
recent memory. ''More and more big companies are resorting to protection
under the Companies Creditors' Arrangement Act, so that it appears to
have almost become a way of doing business,' Bradley said, the newswire
reported.
Grupo Sinergy Agrees to Avianca Stake
Brazilian conglomerate Grupo Sinergy has agreed to take a 75 percent
stake in Colombia's troubled flagship airline Avianca, the airline's two
controlling shareholders said on Thursday, the Associated Press
reported. Avianca, which is in bankruptcy proceedings in a U.S. court,
will receive a capital injection of $64 million in the transaction,
according to the shareholders, Colombia's Valores Bavaria SA and the
National Federation of Coffee Growers. Under the terms of the
transaction, Valores Bavaria, a leading Colombian conglomerate, will
hand its 50 percent stake in Avianca over to Grupo Sinergy. The National
Federation of Coffee Growers initially will hand half of its 50 percent
stake over to Grupo Sinergy. It will keep its remaining 25 percent stake
for three years, after which time it can exercise the right to sell the
holding to Grupo Sinergy.
PG&E Unit's Bond Offering Is Met With Strong Demand
After three years in bankruptcy protection, Pacific Gas & Electric
is emerging with a $6.7 billion bond deal, the online Wall Street
Journal reported. The order book for the PG&E Corp. unit's issue
grew to around $20 billion, according to joint lead bookrunners Lehman
Brothers and UBS. There were allocations made to around 340 investors,
predominantly in the United States.
'The market needed to validate its [current] levels, and there is no
better way to do that than to find a clearing level for $6.7 billion of
triple-B-rated bonds across the yield curve, including floating-rate
notes,' said Jim Merli, global head of debt syndicate at Lehman
Brothers. Yield curve refers to the entire range of various debt
maturities, from shortest to longest, the online newspaper reported.
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